August 06, 2014

China Ratchets up Tension with US by Excluding Apple Products from Procurement List over Security Concerns

It's being reported today that China's government has officially excluded Apple iPads and MacBook laptops from the list of products that can be bought with public money because of security concerns, according to government officials familiar with the matter. This shouldn't come as any surprise – as the government was likely the force behind getting China's CCTV to get the ball rolling in starting a FUD campaign against Apple. They were the first to associate the iPhone with "national security" concerns. Even though Apple officially refuted such claims within 24 hours, it was irrelevant as this was really a government initiative. Report Updated Aug. 09:5:45am PSTNew Video shows Apple's products were excluded.

Next was getting the ever popular Blogchina, known locally as the "Father of Blogs in China" to jump in to support banning Apple products. In late July they published a report in the Global Times saying that "Apple iPhones should be banned by public officials."

Today, Bloomberg reports that "Ten Apple products -- including the iPad, iPad Mini, MacBook Air and MacBook Pro -- were omitted from a final government procurement list distributed in July, according to officials who read it and asked not to be identified because the information isn't public. The models were on a June version of the list drafted by the National Development and Reform Commission and Ministry of Finance, the officials said.

Apple is the latest U.S. technology company to be excluded from Chinese government purchases amid escalating tensions between the countries over claims of hacking and cyber-spying. China's procurement agency told departments to stop buying antivirus software from Symantec Corp. (SYMC) and Kaspersky Lab, while Microsoft Corp. (MSFT) was shut out of a government purchase of energy-efficient computers."

Mark Po, an analyst with UOB Kay Hian Ltd. in Hong Kong noted that "When the government stops the procurement of products, it sends a signal to corporates and semi-government bodies. The Chinese government wants to make sure that overseas companies shouldn't have too much influence in China."

In the end it's about propaganda and a growing political war between the US and China. Back in May NPR reported that China had said that U.S. charges against five Chinese military officials for allegedly hacking into American computers amounted to hypocrisy, citing U.S. surveillance and wiretapping. The country's foreign ministry later summoned the American ambassador to complain about the charges.

Then a July report published by The Guardian stated that "Chinese hackers broke into the computer networks of the United States government agency that keeps the personal information of all federal employees in March, the New York Times reported, citing senior US officials.

The hackers appeared to be targeting files on tens of thousands of employees who have applied for top-secret security clearances."

So today's revelation that China's government is now ratcheting up the tension with the US on this front doesn't come as a surprise. Unfortunately, Apple has now become China's poster child for their political war against the US. It's unknown at this time how Apple will attempt to counter this negative public perception being created by the Chinese Government.

On a last note, a Chinese publication by the name of "Caixin" is denying the accounts as reported on by those such as Bloomberg and others, yet they only use "Industry insiders" to refute the claims. The report bungles not knowing how this could be and that there's an investigation into the matter. Not exactly a convincing argument. More interesting is that the English version of their publication doesn't even carry this story. They leave it as a story only for the locals.

Update Aug. 08 4am PST: According to a new Reuters report, "Apple products such as laptops and tablets are not banned from Chinese government procurement lists, according to the country's chief procurement center, refuting a report claiming Apple was blacklisted on national security concerns."